EAST INDIA HOTELS LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) This appeal by way of special leave arises from assessment order in respect of the year 1982-83 passed by the Sales Tax Officer, Delhi subjecting to tax sales made by the appellants in the restaurants owned by them which are situated in the appellants hotels.

(2.) In the appeal which was filed, the two grounds which were taken were firstly challenge to the 46th Amendment to the Constitution whereby definition of expression 'sale of goods' was amended and the second ground taken was that on a correct interpretation of the Delhi Sales Tax Act, 1975, the sales made in the restaurants could not be taxed.

(3.) Mr. Gopal Subramanium, learned senior counsel for the appellants, has not argued or urged the first contention with relation to the challenge to the 46th Amendment. His contention is that on a correct interpretation of the provisions of the Delhi Sales Tax Act, 1975 and Section 2(1) in particular, there is no sale in a restaurant in a hotel and, therefore, no sales tax could be levied. He submits that after the 46th Amendment it was open to the legislature to amend the law and bring it in line with the said Amendment to the Constitution which permitted such transactions being subjected to sales tax where food is supplied in a restaurant. Relying upon the decision of this Court in Northern India Caterers (India) Ltd. vs. Lt. Governor of Delhi, (1978) 4 SCC 36 (AIR 1978 SC 1591 : 1978 Tax LR 2316) he contends that meals which are served by a hotel in a restaurant to non-residents do not constitute sale of foodstuffs and, therefore, no sales tax could be levied.